Thursday, January 24, 2008

Bipartisan Agreement on Economic Growth Package is a Win for American Families, Small Businesses

Republicans and Democrats in the U.S. House recently put aside partisan differences to compromise on an economic growth package that will put money in the hands of middle-income families and give small businesses incentives to create new jobs. This is a short-term fix, and it by no means should be viewed as a solution to ensure our long-term economic health.

I am pleased that lawmakers in the House moved quickly to draft an economic growth agreement that is a win for the American people. Equally as important as infusing money into our economy, this agreement contains no unrelated spending or tax increases – a Republican condition of support from the beginning of our negotiations.

We cannot lose sight of the fact that this agreement is only a short-term measure to deal with the unsettled economic situation. It is just as important to put policies in place to strengthen our economic competiveness and create more American jobs in the long-term. First and foremost, we should block the largest tax increase in American history looming in 2010. We also must lower our corporate tax rate, which is among the highest in the developed world, and finally end the arcane alternative minimum tax. And Washington finally needs to control spending and reform entitlements so we don’t leave a legacy of debt for generations to come.

The agreement will provide tax relief for working families in the form of rebate checks. Anyone who earned income of at least $3,000 in 2007 will be eligible for this benefit. Rebate checks will include a base amount determined by the greater of two options: (a) Income tax paid in 2007, with a maximum of $600 for a single taxpayer and $1,200 for married couples; or (b) $300 for an individual and $600 for a married couple, provided the individual or couple earned income of at least $3,000 in 2007. There is an overall phase-out for those with adjusted gross incomes above $75,000 for a single taxpayer and $150,000 for married couples.

A children’s bonus will also be included in this rebate calculation. Anyone qualifying for the base amount also receives an additional $300 per child, with no cap on the number of children.

The package provides tax relief for employer in three areas: bonus depreciation, Section 179 expensing and an increase in Government Sponsored Enterprises conforming loan limit.

Bonus Depreciation: The economic growth package will provide for a 50 percent bonus deduction on new equipment in the year it is placed in service, with certain exceptions for equipment with a “long life.” This temporary tax cut offers significant savings on new property with a depreciation period of 20 years or less. This will give employers – particularly small businesses – greater incentive to invest and create jobs for more Americans searching for work. The temporary bonus depreciation, coupled with expensing measures enacted in May 2003, resulted in a four percent increase in business spending in the first six months alone.

Section 179 Expensing: This provision allows employers, including small businesses, to fully expense $250,000 in both new and used tangible property in the year it is purchased up to an overall investment limit of $750,000. This will provide a particularly strong incentive for small companies to invest in their businesses so they can continue to provide good-paying jobs for the American people.

Increase in Government Sponsored Enterprises (GSE)/Federal Housing Administration (FHA) Conforming Loan Limit: The conforming loan limits for both FHA and GSE (such as Fannie Mae and Freddie Mac) loans would be increased from $362,000 to $725,000 and from $417,000 to $625,000 respectively.

The third component of the agreement is that it contains no extraneous spending on unemployment insurance, transportation infrastructure, food stamps, and Medicaid. In a letter to House Speaker Nancy Pelosi, my colleague Rep. Roy Blunt (R-MO), who serves as the Republican Whip, and I asked that extraneous spending be taken off the table, and the Democrats agreed to that.

This economic growth package is not perfect. But the beauty of it is that it is simple, neat and it quickly puts money into hands of working families while also helping small business owners grow and create jobs. These are two of the most critical components for the long-term economic security of our country. Many Americans correctly believe that Washington is broken. This agreement is one small step toward fixing it.

Boehner represents Ohio ’s 8th District, which includes all of Darke, Miami and Preble counties, most of Butler and Mercer counties, and the northeastern corner of Montgomery County . He was first elected to Congress in 1990.